Are There any Tax-Free Payments To Employees Working From Home?
1. What’s tax rules should my company consider if I provide my employees with equipment and tools to work at home? If you provide company equipment or tools, e.g. computers, office furniture, to employees so they can work at home you won’t have to report it on Form P11D as a benefit in kind or Form P11D(b) even if they make modest personal use of the items. Similarly, if an employee needs additional services at home so they can do their job, such as the installation or upgrade of broadband, the extra cost incurred by the company will not be a taxable benefit in kind to the employee. Beware. If an employee uses existing services which have been personally signed up for before they started working from home, e.g. broadband, mobile phone, and you contribute towards the cost of these, you must account for PAYE tax and NI on the amount you pay as if it were extra salary.
2. Can my business pay an employee’s household costs for working at home? The current rules allow you to reimburse employees for “additional” household costs resulting from working at home. HMRC agrees that there will be additional domestic costs such as higher utility bills but caps the amount you can pay without deducting tax and NI. In the 2020 Budget, the amount was increased to £6 per week from £4 with effect from 6 April 2020. For this exemption to apply there must be a homeworking agreement with your employees. Additionally, the employee must work regularly from home. This doesn’t mean all the time but there must be a pattern. In practice, and especially during the coronavirus crisis, any communication, e.g. emails, notifying your staff that they should work at home, will be enough to constitute a homeworking agreement. Remember to keep a copy of any emails you’ve sent to your staff on the subject.